Abstract

While piece rates are routinely associated with higher productivity and wages, they can also generate unanticipated effects. Using cross-country European data, we provide among the first general survey evidence of a strong link between piece rates and workplace injury. Despite controls for workplace hazards, job characteristics and worker effort, piece rates workers suffer a 5 percentage point greater likelihood of injury. This remains despite attempts to control for endogeneity and heterogeneity. As piece rate wage premium estimates rarely control for injury likelihood, this raises the specter that part of that premium reflects a compensating wage differential for risk of injury.